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3.3Businessoperations

3.3.2Logistics/supplychainmanagement

Keyelementstothistopic

Logistics Supplychainmanagement

Logistics

Aprocesswhichplans,implementsandcontrolsthedistributionandstorageofgoodsandservicesfromwhentheyarereceivedfromthe

suppliertowhentheyaredeliveredtothecustomer.

Logistics isoftenseenasthetransportation ofrawmaterialsandfinishedgoods,butaswithprocurementitisaprocessnotjustasingleactivity.

Logistics

Casestudy

Amazonhasinvestedheavilyintechnologytoimproveitslogistics.

Amazonbelievethatthiswillgiveitacompetitiveadvantageandensurethefuturesuccessofthebusiness.

Doyouagree?Givereasonsforyouranswer

WatchtheClip

Whatisthesupplychain?

Thenetworkoforganisationsthatgetproductstocustomers.

Suppliersofrawmaterials Manufacturers Wholesalers/Retailers Customers

Supplychainmanagement

Ensuresthattherightquantityofgoodsareintherightplaceattherighttimeandtheseareprovidedattherightqualityandataprice thatrepresentsvalueformoney.Thisshouldcreatevalueforthecustomerandprofitforthebusinesseswithinthe

supplychain.

Justaminute

Youhave60secondstolistthebenefitsofeffectivesupplychainmanagement

forAmazon

Benefitsofmanaginganeffectivesupplychain

Increasedefficiencye.g.ordertodespatchtimescanbereduced

Lowerunitcosts;pricescanbenegotiatedwithsupplierstoensurethatabusinessreceivesvalueformoney

Competitiveadvantage– anycostsavingscanbepassedontocustomersintheformoflowerprices;alternativelythebusinesscanenjoyincreasedprofitmarginswhichcouldleadtoimprovementsinefficiencyinthefuturee.g.improvedcustomerdeliverymethods

Improvedflexibility– membersofthesupplychaincanworktogethertomeetdemandtoensureastreamlinedprocessandfastproductiontimes24/7(whenappropriate)

Effectivesupplychainmanagement

Planning Procurement Communication Leanproduction

Changingtransportation

Tobeeffective,systemsneedtobereviewedregularlytomaximiseefficiency

Ensuresalesforecastsareaccuratetoensuretherightquantityofgoodsandservicesare

available

Gettingthebestsupplierswillresultingoodvalueandreliablesuppliesoftheright

quality

Co-ordinationandcommunicationwithsuppliersandlogisticswillensuregoodsarriveontimeanddonotdelayproductionprocesses

Leanproductionorremovalofwastecanresultinastreamlinedprocesswhichisfaster,haslowercosts,improvedqualityandbetterreliability.Inmanufacturingbusinesses,methodssuchastotalqualitymanagement andjustintimecanhelp

Logisticsneedtobeconstantlyreviewed,asnewtransportoptionsbecomeavailableanddifferentdistributionroutesarerequired

Workingwithsuppliers

Quickquestionsfordiscussion

1. Whatismeantbythetermlogistics?2. Whatisasupplychain?3. Givetwo typesofsuppliesforTesco4. Explainhowsuccessfulsupplychain

managementcaninfluenceTesco’sa)Costsb)Efficiency

Whenthingsgowrong

Letusconsidersomeexamples

Workingingroupsof3,studythearticle,identifytheproblemseachbusinessfacedandhoweachresolvedtheseproblems

Whenthingsgowrong

Problem:unexpecteddemandandthreatofstrikeactionfromusualdeliveryfirmSolution:Noalternative,butforstafftodelivertheproductsthemselvestoavoidstockwastage;nowreviewedsystemsandhasowndistributionfleetwhichisusedduringpeaktimes

Problem:newbusinessstart-up;failedtoplanthelevelofdemandforitsproducts;hadnotarrangedcollectionofparcelsfromthebusinessSolution:Hadtotravelto10differentpostofficestoensuresuccessfuldistributionofproductsonthefirstday;arrangedforRoyalMailcollectionfromitsofficeswhichstartedtheverynextday

Problem:supplierissuesmeantthatbusinesswaswithoutthecorrectstock;whenitwasdeliveredtherewereerrorsleadingtocustomercomplaints;theseproblemsreoccurredwiththenextsupplierSolution: nowusesanumberofsupplierstospreadtherisk

LESSONLEARNT:Planning/checkingisthekeytopreventingmistakesfromoccurring!

Potentialproblemsofsupplychainmanagement

Qualitycansufferifcostsaredrivendowntoolowe.g.suppliersmaynotbededicatediftheyarenotpaidafairprice

SophisticatedITsystemstomonitorthesupplychaincanbeexpensivetoimplement

Relianceonothermembersofthesupplychainmeansabusinessdoesnothavefullcontroloveritsoperations

SupplychainsinactionFromcowtoKitKat

Conceptlinks

Effectivesupplychainmanagement

Logistics

Reducedwaste

Costs

Canyoulinktheseconcepts?

Sentencestarter – OnebenefitofNestlehavingeffectivesupplychainmanagementis…

Conceptlinks

Effectivesupplychainmanagement

Logisticsthatjourneysareplannedwhichmeansunderfilledlorriesdonottravel.

Reducedwaste

Costs

Sentencestarter - OnebenefitofNestlehavingeffectivesupplychainmanagementis…

Asaresult,fuelisnotusedonpointlessjourneys.

ThiswillmeanNestlecankeepitsfuelcostsdown,whichthereforewillincreaseitsefficiency.